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Thread: Bandwidth Costs

  1. #1

    How much is bandwidth?

    Perhaps my understanding from an economics point of view is off, I'm hoping this thread can educated people on the costs of bandwidth including myself in the case that my understanding is off.

    Over the past ten years major providers have been building networks. They have then been selling bandwidth on these networks.

    Today, most of this existing infrastructure has been paid off, and our costs we pay for bandwidth are for supporting and maintaining the existing infrastructure as well as investment into future infrastrcture.

    When will the infrastructure be finished to a point that we no longer need to spend on future investments? This is when there will be a major change in the industry. Today we have Cogent and Williams Bandwidth available for anywhere around $50 per megabit. For higher quality bandwidth we pay around $450/Mbit. Cogent has laid a lot of fiber and is overselling it, and still falling short.

    If a large company [infrastructure-wise] like cogent goes out of business and sells its network assets to another provider who does not over-sell this infrastructure, how will that change the pricing on their bandwidth offerings? The loss will be suffered by Cogent shareholders, not directly by the industry, and a gain will be realized by a low cost infrastructure to whoever buys cogent (when?) they go out of business.

    What will happen to the web hosting industry as a whole when bandwidth infrastructure is strong enough that (almost) every home and business has a good high speed connection? Of course, not redundant connections... but the point is that bandwidth will one day hopefully be abundant enough with technology that we don't worry about usage anymore. How will that change the hosting industry?

    I hope these questions can spark interesting thoughts and ideas on the future of bandwidth availability and economics. My goal is to have more potential customers educated on bandwidth, what it is, the different types (good, bad ==> fast, slow (latency) ==> wide, thin (bandwidth).) This will help customers to research hosting companies and make better decisions.
    Last edited by refcom; 10-12-2002 at 12:11 PM.
    Travis Doherty
    Web Hosting Services

  2. #2
    Join Date
    Nov 2001
    Nobody knows for sure if cogent is overselling because nobody here that i have seen is in the inside to get facts...until you have facts to use, then the discussion is pointless.

  3. #3
    Of course, the discussion isnt about Cogent only. The questions I have brought up go a lot deeper than that. Its a question more of where the industry is going in the future and educating customers about that.

    I used Cogent as an example only, and possibly an incorrect example as you have pointed out.
    Travis Doherty
    Web Hosting Services

  4. #4
    Join Date
    Aug 2002
    Toronto, Canada
    People will always need tech support, and web hosting services on the most up-to-date computer systems! - free automatic linking to your website

  5. #5
    Join Date
    Sep 2002

    Re: How much is bandwidth?

    Originally posted by refcom

    When will the infrastructure be finished to a point that we no longer need to spend on future investments? This is when there will be a major change in the industry.

    I do not expect bandwidth infrastructure ever to be "finished," at least not in our lifetimes.

    You need to remember that a lot of the bottlenecking right now takes place in "the last mile." Yeah, there's fiber out the wazoo connecting major cities, and increasingly connecting smaller cities, too. But what does that do for me? I'm on a major avenue in a major city (Washington, DC), a stone's throw from MAE East, and my Verizon DSL maxes out at about 100K on downloads. This is broadband?

    Many, many people can't even get DSL or a cable modem. For them, 56k is fast. So, we are an awful long way from having an overabundance of bandwidth in this country, or in this world.

    One area where bandwidth is in especially short supply is wireless. Last time I checked, anything above 128k qualified as "broadband" for a cell phone. What's CDMA generation 2 or 3 going to get us on a phone? 500k? I doubt it, and even 500k is totally insufficient for high-quality video-conferening.

    I can barely videoconference with my DSL. IP is a very very inefficient protocol for transmitting video and audio, but that's what god has given us to work with. Everyone could use at least a T3 to transmit and receive nice high quality video. Forget this 240x180 resolution crap. Forget the degrading compression that DVDs use (and that the standards-bearers should be ashamed-of). You know those silly futuristic movies where everyone has huge wallscreens that they can videoconference with? That's what's going to happen. Except it's not going to be in 2020 as the movies suggest, but more like 2180, because the big companies that run the show move slower than molasses, and the FCC doesn't give a rat's ass about anything except donations to the Party that happens to be in office.

    Now that I'm all worked up, one more thing. Within the past several years, there have been at least two attempts at setting up satellite broadband (and I don't mean DirecPC, which I don't think qualifies as broadband), which would be a great solution for the last mile problem. Skybridge, by Alcatel from France, was going to offer something like 24 MB connections--through a dish! And Teledesic, backed by Gates, McCaw, and Prince moneybags whatever-his-name-is, got a ****ing huge gift of spectrum (1000 MHz!) thanks to the US goverment and its pawns in the ITU. They were going to offer 64MB satellite connections! Their project officially died last week.

    Is it a problem with push or with pull? It's probably some of both. But people like me are stuck with crappy DSL because we can't afford better, not because it's impossible.

    Good question. My answer, to bring it back around, is that we will be dead long before there is sufficient bandwidth. Of course, you may have a less visionary definition of what sufficient is, but that's exactly the problem.

  6. #6
    No - My Vision of sufficient is comparable to yours - when we no longer worry at all. I agree with your views on the problem with developments moving slowly, and the problems in politics, and that that's what were stuck with.

    I think I understand my own question now:

    When will web hosts start to lay their own fiber? This is the major industry change that is coming soon... I expect this to start happening in the next 10-20 years.
    Travis Doherty
    Web Hosting Services

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